While scholars often emphasize a positive relationship between board ties and corporate performance, financial market regulators are increasingly being concerned that board ties create a social insular elite network in which members are loyal towards each other and not necessarily seek to maximize shareholder wealth. Therefore, corporate governance
reform initiatives seek to limit board connectivity among listed corporations. However, little is known about how listed corporations cope with societal expectations to reform their board networks.

We adopt an Institutional Theory perspective to examine the extent to which companies have broken board ties. Using longitudinal data on 75 top-100 listed corporations in the Netherlands from 2001 to 2005, we find that corporations with large board networks have been affected most. Meanwhile, the largest and most prestigious firms have become structurally disconnected from the rest. Moreover, we observe that corporations with exposure to international financial markets and participation in board reform initiatives partially nullified the perceived negative influence of market regulation.

In conclusion, our study indicates the need for studies that go beyond mere compliance, i.e. research that unravels the complex processes associated with corporate responses to board reforms and changing governance expectations.